BP explores selling a slice of Brazil's Bumerangue discovery to Petrobras

What is happening

BP is in active discussions with Petroleo Brasileiro SA about selling part of the Bumerangue block in the Santos Basin, according to people familiar with the talks who requested anonymity because they are not public. They also cautioned that the negotiations may not result in an agreement. BP declined to comment, and Petrobras did not respond to requests for comment.

BP describes Bumerangue as its largest discovery in a quarter century and estimates roughly 8 billion barrels of liquids are present. Early tests from the reservoir indicated high carbon dioxide content, a factor that can make bringing the field online more complex.

Why Bumerangue and timing matter

On an earnings call in late October, Chief Executive Officer Meg O'Neill said, "The engineering team is working on two paths." She added, "One is looking at early production systems and what sort of opportunity might present itself to accelerate revenue from this discovery, as well as then the full field development." O'Neill said Halliburton will run an appraisal program in the coming months to gather more data, and she does not expect a final investment decision before 2027.

BP last month notified Brazilian regulators of a hydrocarbon discovery in the nearby Tupinamba block, also in the Santos Basin, where it operates with a 50 percent working interest alongside Shell. O'Neill said that once BP finishes drilling that part of Tupinamba, "we will be able to move over to Bumerangue."

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Where Petrobras fits in

Petrobras brings decades of deepwater know-how and is advancing technology to more efficiently and cheaply separate CO2-rich gas from oil. That capability lines up with Bumerangue's elevated CO2 readings. The company has been stepping up exploration efforts in Brazilian offshore basins and internationally, and it recently announced oil finds in a contentious area off the Amazon rainforest coast.

In September, Chief Executive Officer Magda Chambriard said Petrobras needs to boost its reserve base by roughly 9 billion barrels of oil equivalent through 2050 to keep production steady. She also said output from the pre-salt is set to peak in the middle of the next decade.

The investor angle

BP's new top boss, Meg O'Neill, is the company's first CEO hired from outside and is expected to concentrate on the strongest upstream assets as BP works to rebuild reserves and lift production after years of underperformance. Bumerangue is a key long-duration option in that effort. If Petrobras takes a stake, BP would be pairing its largest recent find with a partner specialized in deepwater and CO2 handling, while BP advances appraisal drilling that sets the project's pace and economics.

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